The EIB: Banking on infrastructures
Between 2008 and 2013, the European Investment Bank (EIB) intends to invest up to €4.4 billion in ACP countries and South Africa. Emphasis will be particularly on development of infrastructures. The ‘Chinese factor’ remains to be taken into account.
Bodys Isek Kingelez, Ville fantôme, 1996. Mixed medium, 120 x 570 x 240 cm.
Photo: Patrick Gries
In line with the Africa Strategy approved by the European Council in December 2005, support for infrastructures is one of the priorities of the European Union. The Commission intends to commit up to €5.6 billion to develop African infrastructures from 2008–2013. The EIB intends to invest €1.5 billion in the ACP countries as a whole. This money comes from the investment facility, a renewable fund set up under the Cotonou Agreement, plus loans from its own resources amounting to a maximum of €2.03 billion. The EIB’s scope for intervention is increased by a fiduciary fund intended to finance infrastructures in Africa. This was set up in February 2006 with the European Commission, which allocated €60 million to interest rebates on EIB loans and for feasibility studies.
Multiplier effect
With an initial allocation of €87 million, this fund will have a multiplier effect. According to EIB President Philippe Maystadt, it should enable the Bank to grant over €400 million in loans for projects in the fields of energy, water, telecommunications, transport and information technologies. The objective is to facilitate the economic integration of the continent. The first two projects to be launched will be the Felou Dam, which, when completed, will supply Mali, Mauritania and Senegal with power and the construction of a submarine fibre optic cable running around the entire East African coast from south to north.
Branches will also serve Madagascar and landlocked countries. In the energy sector, the EIB is also planning to fund two interconnections in Southern Africa: Zambia-Namibia via the Caprivi Strip and Malawi-Mozambique. Additionally, a loan of €100 million for the construction of a 250-megawatt dam on the White Nile in Uganda is being studied. The EIB is also planning to provide €70 million to fund the construction of the Ghanaian section of the East African gas pipeline between Nigeria and Togo. Also, in the longer term, the Bank is considering the option of participating in the rehabilitation of the Inga Dam in the Democratic Republic of Congo jointly with the World Bank and the African Development Bank -- a NEPAD flagship project. Renewable energy sources should also receive support from the Bank, which decided in December to finance a wind power generation plant with a capacity of 9.4 megawatts in Barbados.
Moreover, a ceiling on loans by the EIB to South Africa has been raised from €825 to €900 million. The emphasis will be on improving access to water and electricity for people living in rural areas and townships. But why borrow from the EIB if China is prepared to lend with no environmental or social strings attached and without a detailed technical analysis of the projects? Maystadt acknowledges the problem, and, like European Commissioner for Development Louis Michel, he intends to expand the dialogue with Chinese financial institutions like Eximbank and African governments about investment conditions in Africa.
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